As Unbundling Beds in, Data Becomes Essential to Price Research

As Unbundling Beds in, Data Becomes Essential to Price Research

Posted on Thu, Mar 7, 2019 @ 8:00

By Amelia Axelsen
March 6, 2019, Waters Technology

In an effort to alter the way firms use and distribute research, and to separate out the cost of that from pure execution, unbundling rules came into force in 2018 with the advent of MiFID II. But in order to navigate the tricky rules of research unbundling, both sell-side and buy-side firms, as well as research providers, need to collect data on how research is consumed and where. Data will provide much-needed insight for the buy side into how to set budgets and select the best providers that will cater to their demands, and for sell-side firms and vendors, it will allow them to price appropriately. The rules are a contentious topic for regulators and investment firms.

Unbundling put pressure on firms’ research practices and called for better management of the research they ingest. Although this has fundamentally altered how firms evaluate research providers and the budgets appropriated for these resources, research providers are also having to overhaul their practices to serve clients with smaller budgets and selective preferences. The regulation has produced mixed results, but both buy-side and sell-side firms are collecting much-needed data to readjust their practices.